Palantir Stock Falls About 6-7% After Earnings Beat as Slower Contract Growth Worries Investors

This article is for general information only and is not financial or investment advice.

Palantir Technologies posted a beat-and-raise third quarter on Monday, but its stock fell on Tuesday morning, Nov. 3. CNBC reported PLTR was down more than 7% in premarket trading. 24/7 Wall St. put the stock at $167.94 in morning trading, down about 6% from Monday’s $178.34 close. Investors focused less on the headline beat and more on signs that new business was growing more slowly.

These are early-session numbers. Prices can move a lot during the trading day.

Why is Palantir stock down after earnings?

On the surface, the results were strong. CNBC reported adjusted earnings of 44 cents a share against the 41 cents analysts expected, citing LSEG. Revenue came in at $2.31 billion, ahead of the $2.18 billion consensus. U.S. commercial revenue more than doubled to $984 million, passing U.S. government revenue for the first time.

Sources point to a few concerns behind the drop:

• Slower contract growth. Investor’s Business Daily reported that total contract value rose only 6% from a year earlier, to $2.918 billion. That raised concerns that revenue growth is outrunning new bookings.
• Shorter deals. According to 24/7 Wall St., CFO Dave Glazer said several eight-figure deals were “shorter in duration than usual,” though he expects contract length and size to grow over time.
• Flat backlog. UBS, quoted by CNBC, called a flat backlog from the prior quarter the “only real flaw.” It said this was the first time that had happened since early 2023, and that Palantir blamed it mostly on shorter contract terms.
• Slower quarter-to-quarter growth ahead. 24/7 Wall St. said Palantir’s fourth-quarter revenue guidance of $2.65 billion beat estimates. Citing Yahoo Finance, it said the forecast implies about 15% sequential growth, compared with 20% in the same period last year.

Valuation and the wider tech selloff

Palantir trades at a very high valuation. 24/7 Wall St. cited a price-to-earnings ratio of about 252 times, which leaves little room for any slowdown. It also noted that stock-based compensation rose to $318.9 million in the quarter from $172.3 million a year earlier.

The drop also fits a wider trend. 24/7 Wall St. reported that Datadog and Snowflake were down about 3% and 2% Tuesday morning, after a week-long software and AI selloff. Apple also fell after its own earnings outlook. William Blair analyst Louie DiPalma told clients that investors “have placed greater scrutiny on the results of companies across the AI ecosystem,” per CNBC.

What analysts are saying about PLTR

Despite the drop, most analysts quoted by CNBC remained positive and several raised targets:

DiPalma argued that Palantir’s growth “should be more resilient than others because its revenue is recurring, with half coming from defense agencies.” Deutsche Bank said Palantir’s “Rule of 40” score, which combines growth and profit margin, reached 158, its 13th straight increase. Citi called bookings “less strong” if “nitpicking.” It noted that the high end of the fourth-quarter guidance implies faster growth than the third-quarter guide did.

Morgan Stanley’s Sanjit Singh, who kept a neutral rating, said Palantir is “entering a new phase of growth powered by the sovereign AI / open-weight model movement,” according to CNBC.

What’s new since Monday night

Monday’s earnings coverage showed a mixed after-hours reaction, with reports of small moves in both directions. Tuesday brought a clearer drop as the market weighed the bookings details and the guidance. Palantir also raised its full-year 2026 revenue outlook to $8.530 billion to $8.534 billion, 24/7 Wall St. reported. That was above the roughly $8.2 billion analysts expected, according to Yahoo Finance figures the outlet cited.

24/7 Wall St. also flagged the US midterm elections on Nov. 3 as a possible source of short-term market volatility.

FAQ

Earlier coverage: PLTR Stock: Palantir Earnings Beat as Revenue Jumps 96% and U.S. Commercial Sales Top Government (Nov 2)